Liner operations a 'bright spot' for A.P. Moller-Maersk

Friday, August 16, 2013

A.P. Moller-Maersk reported a profit of $856 million in the second quarter ending June 30, 11 percent less than the $965 million earned in the second quarter of 2012.
Nils Andersen, the chief executive of the group, said the performance of Maersk Line, the world’s largest container line, was a “bright spot” in the overall performance of the Danish conglomerate, which also owns APM Terminals and has major operations in the oil and gas industry. The company said increased profit was achieved across all businesses except Maersk Oil, its forwarding company Damco and Maersk Tankers.
Total revenue for the A.P. Moller-Maersk was $14.16 billion in the second quarter, down 8 percent from the second quarter of 2012.
Maersk Line. The company's Maersk Line unit made a profit of $439 million in the second quarter compared to $227 million in the same 2012 period.
While volumes were up 2.1 percent over the second quarter of 2012 to 2.2 million 40-foot equivalent unit (FEU) in the second quarter of this year, average freight rates declined by 13 percent to $2,618 per FEU in the second quarter of 2012.
The company said significant improvement in its results were achieved through lower costs.
It said unit cost in the second quarter was $2,703 per 40-foot container, $394 lower than it was in the second quarter of 2012. It said bunker cost was down 31 percent from the second quarter of 2012.
Andersen said while 15 percent of that reduction was the result of lower fuel price, 18 percent was the result of improvements that the company had made in its network that allowed it to use less bunker fuel.
The company said “a large part of bunker savings was due to not running the AE5 service since October 2012 and AE9 service since February 2013, as well as due to other network optimization (speed equalization, vessel scale upgrades and service rationalization.)”
Maersk Line said its inland intermodal costs were reduced by $154 million, and terminal expenses were reduced by $50 million compared to the second quarter of 2012. The company said it had also been focusing on increasing demurrange and detention revenue.
Maersk Line’s total fleet capacity decreased by 0.9 percent from the second quarter of 2012.
Maersk Line did not take delivery of any new vessels, and no vessels were sold during the quarter, though in the third quarter it has begun taking delivery of its new 18,000 “Triple E” containerships. The first five of these 20 Triple-E container vessels, which are to be deployed in the Asia–Europe trade, will be delivered during 2013.
By the end of the second quarter, the Maersk fleet consisted of 275 owned vessels with 1.5 million TEU capacity and 309 chartered vessels with 1.1 million TEU capacity. Maersk Line also owns five and chartered four multipurpose vessels.
Idle capacity at the end of the second quarter of 2013 was 58,000 TEU on 11 vessels versus 163,000 TEU on 28 vessels at the end of the first quarter of this year. The company said its idle capacity “corresponds to around 13 percent of total idle capacity in the market.”
The company said its planned “P3 alliance” with MSC and CMA CGM is still pending regulatory approval and “dialogue with regulatory authorities is progressing as planned.”
Andersen said that the company will continue to carefully manage capacity in its network, saying that as it brings its new 18,000 “Triple E” ships into the Asia-Europe trade “we are very committed not to introduce unneeded capacity into those trades so we will gradually migrate smaller and less fuel-efficient vessels out of that trade.”
The company said it expected results for the full year to be “significantly above the 2012 result based primarily on continued strong cost performance and the stronger result for the first half of 2013 compared to last year.”
APM Terminals. APM Terminals had second quarter net operating profit after tax of $179 million compared to $160 million in the same 2012 period. Revenue was $1.068 billion in the second quarter, up from $1.048 billion in the same 2012 period.
The company said it handled 9.1 million TEU in the second quarter of 2013, the same as in the second quarter of 2012. It said volumes were lower in North America and Europe.
The company said it completed reconstruction of the 600-meter quay in Monrovia, Liberia, on time and within budget and received permits to operate a terminal in Santos, Brazil. It said operations there will begin this quarter, but dredging is not finalized. He said another top priority is the Maasvlakte II terminal in Rotterdam, which will open as soon as possible.
The company said “18,000+ TEU vessels will reshape the port industry, driven by the need for higher productivity, larger cranes, more yard space, and emphasis on transhipment hub ports. APM Terminals is well-positioned in the market to serve this new generation of vessels, with the largest number of transhipment hubs on the Asia–Europe trade along with modern cranes and new port developments such as Rotterdam Maasvlakte II. Equally important, the introduction of 18,000+ TEU vessels creates a cascade effect of larger vessels into other trade lanes.”
Damco. Maersk’s forwarding and logistics arm said it had a loss of $8 million in the second quarter compared to a profit of $28 million in the same period last year. Revenue was $758 million in the second quarter compared to $794 million in the second quarter of 2012.
At Damco, “Ocean freight volumes contracted 2 percent during Q2 2013 compared to Q2 2012. Airfreight volumes were still showing large increases with 12 percent over 2012 and well ahead of market enhanced by the acquisition in 2012 of Pacific Network Global Logistics. The Supply Chain Management segment reported a volume growth of 10 percent over Q2 2012,” the company said.
“While Q2 2012 was positively impacted by the sales gain on the Ocean Blue warehouse facility in China, the Q2 2013 result was adversely impacted by significant cost to implement a new operating system and consolidate operations," it added. - Chris Dupin